OneDegree set to expand into NFTs after Munich Re partnership

OneDegree, a virtual insurer based in Hong Kong, has partnered with Munich Re to offer digital asset services. The partnership has been formed to meet the expected increase in demand for non-fungible tokens (NFTs).

OneDegree plans to expand to NFTs

An SCMP report said that the three-year partnership between OneDegree and Munich Re will see the former move towards offering cryptocurrency insurance services to its clients, including the firms offering various services such as NFTs, asset management and banking.

“With more attention being paid to the metaverse and digital assets, a growing number of coverage providers are considering expanding their [underwriting] capacity for these sectors,” said Alvin Kwock Yin-1un, the co-founder and CEO of OneDegree.

OneDegree is among the four virtual insurance service providers in Hong Kong responsible for promoting the increased use of insurance technology. OneDegree launched its cryptocurrency insurance platform in November 2021 through the Hong Kong Digital Asset Exchange.

As a leading insurer in Asia, OneDegree said that the insurance sector needed to move into the cryptocurrency market, given that the sector had recorded significant growth to hit a valuation of over $2 trillion in only 13 years of existence.

Kwock said that the company was currently talking with potential clients, including asset managers with digital asset portfolios and an NFT conglomerate. It has also approached a custodial service provider.

“Hong Kong is the world’s second-largest contemporary art auction market. It is only natural that NFTs, which are digital representations of art pieces, music, in-game items and videos [on the blockchain], are now gaining traction in Hong Kong,” he added.

The growth of NFTs

NFTs have recorded significant growth over the past year. In 2021, NFT transactions valued at $44.2 billion were reported on the Ethereum blockchain. This is significantly higher than the international art auction sales that reached $26.3 billion in 2021.

The growing demand for NFTs can be attributed to the metaverse. The latter is a virtual universe created using virtual and augmented reality to mimic the physical world. The metaverse has attracted many top brands globally that want to create immersive experiences for their users.

Some of the reputable financial institutions that have moved into the metaverse include JPMorgan and HSBC. Toyota and Nissan recently announced plans to venture into the metaverse to create virtual experiences for their customers and personnel.

The growth of the NFT sector has also presented significant risks to the owners of these digital assets. Cases of hacks and thefts in the NFT space have significantly increased over the past year. In 2021, the 10 largest hacks in the sector accounted for 56% of the $3.2 billion worth of cryptocurrencies stolen from individuals and firms. However, the report failed to mention thefts related to the NFT sector, despite several reported instances.

Munich Re will support OneDegree in formulating its reinsurance policy and provide technical underwriting services. Munich Re already offers reinsurance services for digital assets outside Hong Kong.